Archer Aviation (ACHR 2.57%) is working toward commercializing a novel aircraft that could disrupt urban mobility for the better. This battery-powered craft, called Midnight, can seat four passengers (plus a pilot), is quieter and more sustainable than helicopters, and could save travelers hours in traffic by flying above gridlock.
The company has been hatching this electric vertical takeoff and landing (eVTOL) for over seven years. And while at times it's made progress toward gaining regulatory approval from the Federal Aviation Administration (FAA), its stock has largely underdelivered.
Indeed, if you had invested $1,000 in Archer when it went public at about $10 a share in 2021, your holding would be worth about $650 right now -- a 35% decline. In that same time, an investment in the S&P 500 would have roughly doubled your original investment.
ACHR Total Return Level data by YCharts
Shares of Archer currently trade for about $6.50, valuing the company at about $4.25 billion. With shares below $10, is now the time to buy Archer, or should you wait for more concrete progress?
Image source: Archer Aviation.
The case for Archer
Archer Aviation may be pre-revenue, but it may not stay that way for long.
For one, Archer has backing from blue chip partners, like United Airlines, Stellantis, and Boeing. It has international partners and collaborators like Japan Airlines, Korean Air, Ethiopian Airlines, and the government of Serbia. It also claimed to have had a $6 billion backlog at the end of 2024 and had over $1.6 billion in cash and short-term investments at the end of its third quarter.
The company says it's making progress through the FAA's certification process. It lacks FAA Type Certification, which it needs to fly passengers commercially, but recent White House initiatives may accelerate the process. Indeed, CEO Adam Goldstein recently told Fox Business that Archer could begin flying in U.S. cities as soon as this summer.
Archer was also announced as the official air taxi provider for the LA 2028 Olympic and Paralympic Games.
Separating hype from reality
This is all exciting news for Archer. At the same time, we have to be careful not to get too caught up in hype. Archer has a history of making big promises. For instance, in February 2021, it told investors it predicted it would get FAA Type Certification in 2024 and reach free cash flow breakeven in 2025, and neither of these have yet happened.
NYSE: ACHR
Key Data Points
Truth is, eVTOLs still carry a lot of unknowns, which makes valuing a start-up like Archer difficult. We don't know for certain, for instance, how much revenue each eVTOL will end up producing, nor how much it will cost to build or operate them. We don't even know if eVTOLs will catch on or if the price of flying in one will be too high for the average consumer to afford.
Success for Archer, then, will depend on not just putting eVTOLs in the sky but scaling production while keeping costs under control.
All that is to say, there's no guarantee that buying Archer under $10 will make you rich. The stock is a speculative play on an industry that doesn't exist yet. Aggressive investors may want to proceed, but size positions according to your risk tolerance.
